Prominent Oregon business family at odds after patriarch’s death

By the time he died in May, the legend of Ken Austin Jr. was well established in Yamhill County and beyond: A gifted entrepreneur, generous philanthropist and genuine good guy​. Austin had worked for six decades to make his dental furnishings company into one of the most powerful economic engines in the area.

Then, in the last months of his life, Austin did something that his family and friends are still struggling to understand. Unbeknownst to his children, he changed his will and made one of his senior executives, Brett Baker, the trustee of his trust.

As far as Baker was concerned, that elevated him from manager of Austin’s sizeable estate to the controlling shareholder of A-dec, the 1,200-employee dental ​equipment manufacturer that was the crown jewel of the Austin estate.

That was news to Austin’s children, particularly to his son-in-law Scott Parrish, who had worked for A-dec for 34 years — the last six as chief executive officer. They denied Baker’s claims and have vowed to maintain control.

A genuine corporate takeover battle has since ensued. Lawyers and public relations professionals have gathered in the heart of Oregon’s wine country to wage white-collar war. The ill will between the two sides is palpable​, and at stake is Newberg’s largest employer that brings in $375 million a year.

“We are shocked,” said Parrish, who continues to serve as CEO, while he and the Austin children carry on as if Baker doesn’t exist.

Parrish said the family feels betrayed that Baker is trying to take control of a company they feel he’s never been a part of. They don’t dispute that his father-in-law appointed Baker trustee of his trust. But they challenge Baker’s assertion that he now controls a majority of the A-dec voting stock.

Baker counters that he is merely fulfilling the wishes of Austin. He took steps to take control of A-dec in August, notifying the Austin children — now in their 50s and 60s — that he intended to appoint his people to the board and remove Parrish as CEO.

“Ken asked me to do this,” Baker said. “This is not a fun job. I don’t get compensated beyond my current salary.”

A legendary couple

It’s all a jarring departure from the feel-good story of Ken Austin and his wife, Joan. They arrived in Oregon in the 1960s and took Yamhill County by storm. They put down roots in Newberg and built A-dec ​into ​multi-million-dollar international company​.

A-dec became the largest privately-owned dental manufacturing company in the United States and ​earned the family a fortune. In 2009, Joan diversified into the hospitality business and built another significant Yamhill County landmark — the Allison Inn and Spa. Ken went on to reinvent himself as a philanthropist. And in that role, he helped save Special Olympics of Oregon recently when he agreed to forgive the ​$490,000​ debt the struggling non-profit owed him.

The couple had time to pursue these other interests because in 2007, they handed over day-to-day management of A-dec to Parrish, their son-in-law. Parrish is married to Ken and Joan’s daughter, Lonnie.

In recognition of this generational shift, the elder Austins gave ​a small handful of​ A-dec shares to their daughter and son-in-law. They also gave the same number of shares to their son, Ken III and his wife, Celia. Joan Austin died in 2013.

But giving up daily management of A-dec was difficult for the senior Austin.

“I continued to envision myself as A-dec’s benevolent dictator, where I still pulled the puppet strings,” Austin wrote in his 2015 autobiography. “Needless to say, having me constantly second-guess his decisions and occasionally going behind his back to countermand those decisions were not Scott’s idea of a good time.”

Ultimately, Austin realized he was being unreasonable and tearfully “promised Scott and his team that they had my complete loyalty and support. It’s a promise I have always kept.”

Well, until last spring anyway. Then the patriarch ​apparently​ changed his mind. Without telling Parrish or anyone else, Austin made Baker trustee of his trust.

This is the central mystery of the fight for A-dec. Why did Austin choose Baker? Did he have last-minute qualms about Parrish? Did something happen inside the family or within A-dec that prompted him to turn to Baker? Was the ​87-year-old​ in his right mind? ​

Battle of the boards

Baker joined the Austins in 2014. A long-time banker who worked for years at Bank of America, Baker took on management of Austin Industries, a separate company that oversaw most of Austin’s holdings unrelated to A-dec, as well as the family’s sizeable estate.

Baker owned no A-dec stock, nor did he have any operational role. He did join the A-dec board in 2016.

Over the years, the Austins had created a bewildering array of corporate and personal trusts as part of their estate planning. They repeatedly amended the A-dec terms of incorporation and bylaws. There were stock recapitalizations and splits. The stock was divided into Class A voting shares and Class B non-voting shares. There was also a Share C trust and no less than seven grantor-retained annuity trusts.

As far as Baker is concerned, there is no doubt that through all the changes, the elder Austin retained a majority of the voting Class A shares. So, he claims, when Baker was made trustee of Austin’s trust, that gave him control of A-dec.

The next generation of Austins disputes that.

So Baker went on the offensive. Early last month, he requested a special board meeting. Among other things, he wanted to push Parrish and Megan Clubb off the board and replace them with two of his own nominees, Portland lawyer Ron Greenman and Katy Durant, a real estate investor and former member of the Oregon Investment Council.

The Austins asked for their own special meeting. Tops on their agenda: Ousting Baker from the A-dec board.

The meeting was held Sept. 25 in what is known as “the farmhouse” on the A-dec campus. It was a tense affair, recalls Roy Tucker, a Portland lawyer representing Baker. ​He recalled that Lonnie Austin lit into Baker, accusing him of lying to them.

Parrish and the three Austins outvoted Baker. But in the end, both sides claimed victory: A-dec now has two boards of directors. On one side, Parrish is in as A-dec CEO, and Baker is off the board. On the other side, Parrish is out and Baker remains on the board.

The next day, Baker went to Yamhill County Circuit Court asking a judge to affirm that he has control of A-dec and forbidding Parrish or the Austins from doing anything with the company or its bylaws that would remove Baker from the board or his current position. The first hearing in the case is scheduled later this month.

A-dec put up a ​​new section on its website about Baker’s takeover attempt. “A-dec to continue founders’ legacy as family-owned business!” the site proclaimed.

More than 300 people, many identifying themselves as current or former A-dec employees said they were on the side of Parrish and Austin’s children. Three other key individuals have also sided with them and against Baker — A-dec’s three independent directors Megan Clubb, Steve Pratt and Bill Stoller.

Pratt, former chairman of Portland manufacturer Esco, called Baker’s moves a “power grab.” He added: “Ken and Joan Austin chose Scott Parrish to run the company and A-dec has flourished under his leadership for 15 years.”

Bill Stoller, a successful entrepreneur in his own right and an A-dec director, was even more outspoken.

“​I’ve worked with Ken and Joan on a personal business level and with Ken alone in several meetings counseling him and he giving me input on his personal history,” Stoller said. “I definitively know their wish all their lives was to pass their business to their children, grandchildren and great grandchildren.”

Tucker, Baker’s attorney, heartily disagrees.

“That’s baloney,” he said. “The hard fact is, Ken Austin loved his kids. They are very well treated. But he didn’t trust his company with them.”